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China’s Cosco stake in Hamburg port expressed protest over German move

China's Cosco stake in Hamburg port expressed protest over German move
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  • Green light for COSCO investment divides lawmakers
  • There are no management or strategic decisions for Cosco
  • China’s foreign minister: hopes for ‘practical cooperation’
  • Opposition to agreements between coalition parties

BERLIN, Oct 26 (Reuters) – The German cabinet on Wednesday allowed China’s Cosco to buy a stake in a terminal at the country’s largest port in a decision pushed by Chancellor Olaf Scholz that sparked unprecedented protests within the ruling coalition.

With the support of Scholz’s Social Democrat-led ministry, the cabinet approved Cosco’s 24.9% stake investment in logistics firm HHLA. (HHFGn.DE) Three terminals in the port of Hamburg.

The approved investment is lower than the initially planned 35% stake that the Chinese shipping giant and HHLA had targeted, and gives COSCO no say in management or strategic decisions.

But the painful experience of being overly dependent on Russian gas has changed the attitude of many politicians towards strategic foreign investment. The foreign ministry was so upset about the approval that it drew up a note documenting its rejection at a cabinet meeting, two official sources told Reuters.

The investment “disproportionately expands China’s strategic influence on German and European transport infrastructure as well as Germany’s dependence on China,” the document seen by Reuters said. This “considerable risk arises when elements of the European transport infrastructure are influenced and controlled by China – when China itself does not allow Germany to participate in Chinese ports”.

In the event of a crisis, the acquisition would open up the possibility for China to politically prop up parts of Europe’s critical infrastructure alongside Germany, it said. The Economy Ministry and four ministries led by the liberal Free Democrats have joined in drafting the note, sources said.

Scholz, the former mayor of Hamburg, has once again signaled his will against his coalition partners, the Greens and the Free Democrats. After unilaterally pushing through nuclear power expansion last week, the Cosco move fueled tensions at home and among European allies who oppose Chinese investment and already see Scholz as increasingly isolated.

Scholz is scheduled to travel to China next week.

HHLA Welcome Agreement

HHLA, which is majority-owned by the city of Hamburg and one of the main users of the port, welcomed the deal.

“We appreciate that a resolution was found in objective and constructive discussions with the federal government,” said Angela Titzrath, chairwoman of HHLA’s executive board.

It is working to find an agreement with Cosco on new terms in a timely manner, he said.

With the original 35% deal, the German logistics firm wanted to tie its long-standing shipping customer to the Port of Hamburg in the face of intense international competition.

Cosco did not immediately respond to a request for comment. A German government source told Reuters that the Chinese company had agreed to the deal.

Asked about the deal, Chinese Foreign Ministry spokesman Wang Wenbin said Wednesday that China hopes “relevant parties will rationally view pragmatic cooperation between China and Germany (and) stop unreasonable propaganda”, without elaborating further.

Supporters of the HHLA deal say it will allow Hamburg to keep pace with rival ports that are competing for Chinese trade and some of which are owned by Cosco.

Reporting by Andreas Rink, Jan Schwartz, Eduardo Baptista, Paul Carrell; By Rachel More, Kirsty Noll; Editing by Maria Sheahan, Louise Havens and Nick McPhee

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